Slep-Tone Entm't Corp. v. Coyne

• Decision Date: 30 September 2015
• Docket Number: 13 C 2298
• Parties: Slep–Tone Entertainment Corporation, Plaintiff/Counter-Defendant, v. John Coyne d/b/a Extreme Karaoke and Absolute Disc Jockeys, Allen Mando, Rachel Yackley, Peter Garcia, and Kenny Seidman d/b/a DJ Kenny B, Defendants/Counter–Plaintiffs.
• Court: U.S. District Court — Northern District of Illinois

141 F.Supp.3d 813

Slep–Tone Entertainment Corporation, Plaintiff/Counter-Defendant,

v.John Coyne d/b/a Extreme Karaoke and Absolute Disc Jockeys, Allen Mando, Rachel Yackley, Peter Garcia, and Kenny Seidman d/b/a DJ Kenny B, Defendants/Counter–Plaintiffs.

13 C 2298

United States District Court, N.D. Illinois, Eastern Division.

Signed September 30, 2015

Vivek Jayaram, Johanna R. Hyman, Jayaram Law Group, Chicago, IL, for Plaintiff/Counter–Defendant.

Matthew M. Saffar, Law Offices of Matthew M. Saffar, Palatine, IL, for Defendants/Counter–Plaintiffs.

MEMORANDUM OPINION AND ORDER

Gary Feinerman

, United States District Judge

Slep–Tone Entertainment Corporation brought this suit against John Coyne, Allen Mondo, Rachel Yackley, Peter Garcia, and Kenny Seidman, alleging unauthorized use and display of Slep–Tone's Sound Choice trademarks in violation of §§ 32 and 43 of the Lanham Act, 15 U.S.C. §§ 1114

, 1125, and the Illinois Deceptive Trade Practices Act, 815 ILCS 510/1 et seq . Doc. 1. The court denied Defendants' motion to dismiss. Docs. 51–52 (reported at 41 F.Supp.3d 707 (N.D.Ill.2014) ). Defendants then asserted counterclaims alleging, among other things, that Slep–Tone defrauded the U.S. Patent and Trademark Office ("USPTO") into registering the marks. Doc. 53. The court dismissed all but one of the counterclaims, Docs. 9091 (reported at 2015 WL 127836 (N.D.Ill. Jan. 8, 2015) ), and Defendants later filed amended counterclaims, Doc. 103. Trial is set for February 22, 2016. Doc. 175.

Slep–Tone has moved for summary judgment on its claims, Doc. 113, and on the counterclaims, Doc. 151, and Defendants have cross-moved for partial summary judgment on two of the counterclaims, Doc. 145. Also before the court are three ancillary motions directed at the parties' Local Rule 56.1 materials and supporting evidence, Docs. 156, 160, 170, and Slep-Tone's motion to sanction Defendants in connection with certain of their counterclaims, Doc. 96. For the following reasons, Slep–Tone is granted summary judgment on the antitrust and tortious interference counterclaims; the parties' summary judgment motions otherwise are denied; Slep–Tone's sanctions motion is denied without prejudice; and the three ancillary motions are granted in part, denied in part, and denied as moot in part.

Background

When considering Slep–Tone's summary judgment motions, the facts are considered in the light most favorable to Defendants, and when considering Defendants' summary judgment motion, the facts are considered in the light most favorable to Slep–Tone. See Cogswell v. CitiFinancial Mortg. Co., 624 F.3d 395, 398 (7th Cir.2010)

("When the district court decides cross-motions for summary judgment ... we construe all facts and inferences therefrom in favor of the party against whom the motion under consideration is made") (internal quotation marks omitted). On summary judgment, the court must assume the truth of those facts, but does not vouch for them. See Smith v. Bray, 681 F.3d 888, 892 (7th Cir.2012).

Slep–Tone has moved to strike several paragraphs of Defendants' Local Rule 56.1(b)(3)(B) response to its Local Rule 56.1(a)(3) statement in support of its motion for summary judgment on its claims. Doc. 160. Slep–Tone also has moved to strike several paragraphs of Defendants' Local Rule 56.1(a)(3) response to its Local Rule 56.1(b)(3)(C) statement of additional facts in opposition to Defendants' summary judgment motion. Doc. 170. Some of the responses targeted by Slep–Tone are contradicted by admissions elsewhere in Defendants' Local Rule 56.1 materials. Compare, e.g., Doc. 154–1 at ¶ 28 (denying Slep–Tone's assertion that 80–100 percent of a typical karaoke show is composed of Sound Choice tracks) with Doc. 152 at ¶ 27 (admitting the same). Some responses are not material to resolving the summary judgment motions. To comprehensively address Slep–Tone's two motions to strike would make this opinion far longer than it needs to be, so the court will address the motions only as necessary, principally in the discussion of the antitrust and tortious interference counterclaims.

For their part, Defendants have moved to strike Slep–Tone's expert report and a declaration by Slep–Tone's founder, Kurt Slep. Doc. 156 at 5–9. Christopher Tragasz prepared the expert report regarding his forensic examination of Coyne's computer drives. Doc. 130. Defendants contend that the report violates Rule 26(a)(2)(B) because it does not identify who conducted the examination (incorrect: the report clearly states that Tragasz did, id . at 2); does not indicate how the analysis was conducted (incorrect: the report identifies which hard drives Tragasz examined, the software he used, and the results of his analysis, id . at 5–7, 14–56); and does not indicate how Tragasz knew the files were copies of Slep–Tone tracks or who altered the tracks (incorrect and irrelevant: Tragasz explained that he sampled the files and concluded that they were Sound Choice files based on their filename and graphical content, id . at 6, and one does not need to know who altered a file to conclude that the file has been altered). Doc. 156 at 5–7. Defendants' contentions are meritless for these reasons.

In their reply in support of their motion to strike, Defendants assert that Tragasz is not qualified to offer an expert opinion. Doc. 167 at 2–3. A reply brief is too late to first raise the issue of Tragasz's qualifications. See Narducci v. Moore, 572 F.3d 313, 324 (7th Cir.2009)

("[T]he district court is entitled to find that an argument raised for the first time in a reply brief is forfeited."); Cromeens, Holloman, Sibert, Inc. v. AB Volvo, 349 F.3d 376, 389 (7th Cir.2003) ("Because Volvo raised the applicability of the Maine statute in its reply brief, the district court was entitled to find that Volvo waived the issue."). In any event, Tragasz has worked as a digital forensic examiner for over eight years, has extensive technical training, and has given expert testimony in several cases. Doc. 130 at 8–12. That is sufficient to qualify him to testify as an expert on his forensic examination of Coyne's computer. See United States v. Parra, 402 F.3d 752, 758 (7th Cir.2005) ("[W]hile extensive academic and practical expertise is an area is certainly sufficient to qualify a potential witness as an expert, Rule 702 specifically contemplates the admission of testimony by experts whose knowledge is based on experience.") (internal quotation marks omitted).

Defendants' motion to strike also contends that ¶¶ 8, 14–18, and 21 of Slep's declaration, Doc 115–1, are inadmissible because Slep–Tone did not disclose Slep as an expert witness. Doc. 156 at 7–9. Those paragraphs contain not expert testimony, but rather Slep's personal observations and opinions about Slep–Tone's business activities, the karaoke industry, and Slep's own inspection of the files on Coyne's drives. Slep is perfectly competent under Federal Rules of Evidence 602

and 701 to testify on those matters. That said, Slep–Tone admits that those paragraphs are "unnecessary to prove infringement," Doc. 165 at 6, and so the court will not rely on them in resolving the summary judgment motions. Defendants do not object to any other paragraphs in Slep's declaration, so any such objections are forfeited. See G & S Holdings LLC v. Cont'l Cas. Co., 697 F.3d 534, 538 (7th Cir.2012) ("We have repeatedly held that a party waives an argument by failing to make it before the district court.") (citations omitted).

A. Slep–Tone's and Defendants' Business Activities

For almost thirty years, Slep–Tone has been a leading manufacturer of karaoke accompaniment tracks under the brand name "Sound Choice." Doc. 154–1 at ¶ 2, 16. Defendants deny this assertion, arguing that Slep's supporting declaration lacks foundation and that the record does not show that Slep–Tone was an "industry leader" for the entire period of its existence, id . at ¶ 16, but they do not object to the pertinent paragraphs of the declaration in their motion to strike, Doc. 156. Moreover, Slep can testify to his own company's reputation in the karaoke industry, see Alexis Lichine & Cie. v. Sacha A. Lichine Estate Selections, Ltd., 855 F.Supp. 479, 486 (D.Mass.1994)

(in a trademark case, admitting a party's testimony about his and his company's reputation in the wine industry), and Defendants adduce no contrary evidence.

Slep–Tone produces tracks by re-recording popular songs, omitting or fading out the lead vocals, and adding lyrics and visual cues that allow the karaoke participant to know when and what to sing. Doc. 154–1 at ¶ 19; Doc. 164 at ¶ 41. The company records many of its accompaniment tracks in the CD+G (compact disc plus graphics) format. Doc. 154–1 at ¶ 20. Slep–Tone also produces a product called the "GEM Series," which is intended for professional karaoke hosts—also known as "karaoke jockeys" or "KJs"—and which is recorded in a format called MP3+G. Id . at ¶ 23. Slep–Tone's primary consumers are karaoke hosts and karaoke venues. Id . at ¶ 22.

Slep–Tone products are quite popular, with 80–100 percent of the typical karaoke show composed of Sound Choice songs. Doc. 152 at ¶ 27. But the products have been widely pirated, with many users copying or uploading tracks from original Sound Choice products onto portable media, such as a computer or thumb drive; Slep–Tone calls this phenomenon "media shifting." Doc. 154–1 at ¶ 29. Slep–Tone maintains a "one-to-one" media-shifting policy, which means that every Sound Choice-branded track copied to portable media must be traceable to an original Sound Choice disc on a one-to-one basis. Id . at ¶ 30. KJs that violate the one-to-one policy are not authorized to use the Sound Choice-branded tracks in a commercial setting. Id . at ¶ 31. Slep–Tone estimates that 95% of active karaoke hosts have engaged in at least some unauthorized media-shifting. Doc. 152 at ¶ 27.

Although Slep–Tone manufactures karaoke tracks for sale to KJs and the general public, it does not sell...